Confronting Wasteful Spending: The Senate Vote on Ethanol

Lurita Doan

6/20/2011 12:01:00 AM - Lurita Doan
Last week, the Senate finally overcame the entrenched and powerful ethanol special interest group to eliminate $6 billion in annual taxpayer subsidies. This historic vote just might signal that a new era of fiscal responsibility is possible and give hope to a worried nation that Washington can confront national problems.

After the first, early Allied success during WWII, Winston Churchill famously declared that "This is not the end. It is not even the beginning of the end--But it is, perhaps, the end of the beginning". Could the Senate vote on killing of one of the most expensive and irresponsible taxpayer subsides signal the "beginning of the end" of stupid and wasteful government programs that cost too much, reward only a special few, and rarely deliver the promised benefits? Let us hope so.

A stubborn Washington has taken a long time to finally come to its senses and kill ethanol subsides. Once heralded as a great "green" initiative, studies soon proved that diverting huge amounts of American farmland to the production of expensive corn-based ethanol actually increased green house gases. America's best scientists warned stubborn senators that the nation’s ethanol policy was not achieving the desired results, even as it consumed massive amounts of taxpayer money.

Unfortunately, key Senators such as Charles Grassley (R-Iowa) had fully embraced the program as a way to divert more of the nation's wealth to a select few in his home state of Iowa. Year after year, the studies showed that the ethanol subsidy was a colossal waste. Yet, more and more resources poured into the market-distorting ethanol program which now consumes nearly 40% of the entire US corn crop, driving up costs on nearly all food stuffs and major feed additives throughout the economy.

Year after year, experts would publish a fact-based report on the harm and expense of the great ethanol swindle. Meanwhile Senator Grassley, powered by a huge ethanol lobby desperate to continue subsidies, moved the nation in the opposite direction. Each year taxpayers were asked to pony up even more for the ethanol industry, while high tariffs were erected to preclude any imports from Brazil.

The EPA, under the Obama Administration, encouraged Americans to buy a product that they did not want, by forcing gasoline producers to blend ethanol into each gallon of gas and increasing the percentage to 15%. Put simply, with the help of the EPA, the ethanol industry and Senator Charles Grassley had perfected one of the most expensive scams in American history.

Many Americans watched in amazement as Grassley, who was chiefly responsible for one of the most wasteful and misguided frauds on American taxpayers, professed himself to be a fiscal hawk and a champion in the fight on waste, fraud and abuse. But his posturing was a masquerade, for one cannot simply declare intent to illuminate waste fraud and abuse, while advancing such a wasteful boondoggle to American taxpayers. Eventually, the costs and waste must be explained.

Little wonder then why so many honest Americans are distrustful of politician's motivations and have gown cynical of the budget debates. Little wonder, too, why so many fiscally responsible Republicans are increasingly resentful and mistrustful of entrenched Senators, such as Grassley, who are unable to confront the core problems.

And that is why Senators Tom Coburn (R-OK) and Senator Dianne Feinstein (D-CA) deserves kudos. They had to overcome resistance from their own caucuses in order to end the ethanol boondoggle. Is it possible that the nation is starting to, finally come to grips with wasteful spending? Are we indeed at the beginning of the end??

Unfortunately, the Senate's effort at voting down corn subsidies is does not solve the problem. First, while the subsidies may be ending, the EPA regulation still requires that gasoline sold in U.S. have a15% ethanol content. Gas prices might very well jump as Americans finally come to grips with the true market costs of EPA’s mandates on ethanol. Americans may have to insist that lawmakers reduce or eliminate the inclusion of ethanol into the nation’s gasoline supply.

Second, the ethanol lobby, championed by Senator Grassley, is not going to disappear quietly. This industry is dependent upon government subsidies and relies on the government to force Americans to purchase ethanol. Americans should not be surprised to see middle-of-the-night legislative riders attached to complicated bills in an effort to keep the scam alive.

For now, let us rejoice. The Senate has, at long last, overcome powerful special interests and worked in a bi-partisan way to put an end to the costly ethanol boondoggle. Senate buffoons, such as Grassley, who helped to push the nation to financial insolvency have been exposed and defeated.

It's a start.